immunization efforts (i.e., adoption). In addition, the health benefits from vaccines are realized at different times after vaccination.

These factors affect the time interval before the health benefits associated with a vaccine and certain cost outlays (such as vaccine purchase for immunization programs) will reach a steady state and are used to determine the annualized “present value” of results that will be achieved at various times in the future.

The process by which benefits and costs that are delayed for some years are converted to their current equivalent value is termed “discounting.” This procedure enhances the relative importance of effects realized after a short delay as compared with a long one. In the central analysis, the discount rate used is 0.05. The effect of discounting at different rates is examined in Chapter 9.

Estimation of Vaccine Preventable Illness

Vaccine preventable illness (VPI) is defined as that portion of the disease burden that is preventable by delivery to the entire target population, at the anticipated age of administration, of a hypothetical vaccine that is 100 percent effective.

Calculation of Potential Health Benefits for Each Vaccine

Chapter 7 describes the integration of the components outlined above to derive the annualized present value of the potential health benefits for each vaccine candidate. Figure 1.1 summarizes the basic steps used in the analysis. (When it is believed that vaccines may have different utilization rates within their respective target populations, predicted rates can be used as an adjustment in this calculation process and the values derived would represent expected, rather than potential, health benefits.)

Cost Calculations

A comprehensive assessment of the expected net costs associated with the use of vaccine candidates would require the calculation of the cost of vaccine development, the cost of the immunization program including vaccine administration, the cost savings from treatment averted, and the cost of adverse reactions. Procedures to perform these calculations are outlined in this report and in more detail in the committee’s first report (Institute of Medicine, 1985).

For this analysis, however, the committee judged that it was not practical to attempt to estimate the costs associated with treating disease or the potential savings from treatment averted by vaccines. The committee believed that it would be extremely difficult and probably unrealistic to estimate for the developing world as a whole the proportion of cases, complications, and sequelae that receives treatments, the nature of those treatments, and their average costs.